Fears Telstra could exert control over NBN

Stuart Corner

The national broadband network was supposed to create a level playing field, giving all service providers equal access to connected households, but there are fears that Telstra could still exert bottleneck control over access to customers, pushing up the cost of services.

The NBN is being constructed with 121 points of interconnect (PoIs). Any company that wants to serve NBN customers, even in niche or regional markets, must deliver its traffic to all 121 PoIs and have equipment installed in those PoIs: a significant investment. Alternatively, it can use the services of an intermediary provider that has made this investment.

Telecommunications analyst Paul Budde said: ''Only two or three wholesale/retail operators can afford to build out national services on top of the NBN. Narrowing that down even further, among these two or three, Telstra is by far the most dominant player. And it is evident that the cash-rich company can easily outcompete others.''

His concerns have been echoed by others in the industry.

Advertisement

NBN Co proposed only 14 PoIs, but after a review the ACCC recommended increasing the number to 121, a recommendation adopted by the government.

The ACCC is now conducting a statutory review - although no significant change in the number of PoIs is expected.

In a submission to that review, service provider HarbourIT reinforced Mr Budde's view.

''It is impossible to make a go of [providing services over the NBN] in regional and remote areas under current arrangements, as backhaul imposes a major cost disadvantage relative to the large, vertically integrated ISPs with their own backhaul infrastructure,'' HarbourIT said.

However, there are several large service providers such as AAPT, Nextgen Networks and Optus offering NBN access services to smaller service providers.

Nextgen made a big play for this market when it announced its NBN Connect service in mid-2011 but owner Leighton Contractors has sold Nextgen to the Ontario Teachers Pension Plan (the sale is yet to close) and industry sources have said they believe Nextgen's commitment to providing NBN access is being wound back. Nextgen was unavailable to comment.

AAPT CEO David Yuile said he believed AAPT could offer ISPs a competitive NBN access service. ''We have seen a lot of interest from new retail providers looking to enter the market. What we do is package up a service that includes NBN access and connection to the PoI. They just want a national service and we can do that for them.''

However, Mr Yuile said there were some PoIs that it would be uneconomical for AAPT to reach.

''For some of the very remote PoIs we would probably have to buy from Telstra. We think there is no real competition there.''

38 comments

So the overseas owned telcos won't spend the money but will continue to bludge on Telstra (with the help of the ACCC of course) wherever convenient. No doubt the ACCC will insist that Telstra provide the use of its lines at cost to continue the chirade of fair competition.

Commenter

John

Date and time

June 11, 2013, 10:26AM

Lines that Telstra never paid for in the first place and haven't been proactive in replacing since they were partially sold? Telstra have been ripping off consumers for years scamming money from them in such a cheap fashion that it's unaustralian. About time they got their comeuppance. They sat there and stalled the NBN for 9 months! How much are Telstra paying you to wave their pom-poms.

Commenter

Dale

Location

Melbourne

Date and time

June 11, 2013, 11:15AM

I wonder why people always claim Telstra doesn't pay for their infrastructure? Have they considered the money gained by the gov't over the years is much more than the costs of infrastructure the gov't spent before?

Besides, why are they so keen to have subsidize overseas companies that don't want to invest in infrastructure here but just to gain more profits?

Commenter

Francis

Date and time

June 11, 2013, 12:14PM

@Dale, so the courier driver that turns up to deliver your online purchase didn't pay for his delivery van because you did during your online purchase so therefore you own it right? Wrong. Telstra has replaced those lines many times over just as it has built 6,000 telephone exchanges and around the same number of mobile base stations and laid a cable to every house and business in Australia over the past 100 years. Well then I guess Opus doesn't own their base stations either because you paid for them too. The fact remains that without Telstra, there is no NBN, because the federal government would have to rebuild every pit and pipe and run every bit of cable again. If they did it 4 times as fast and I don't see how as they don't have the 100,000 employees that Telstra did and it will still take them 20 years with 400.000 employees. The fact remains that the NBN is utilising much of the fibre already laid by Telstra to deliver your NBN and you think that the shareholders and customers of Telstra should hand that over free to Telstra's competitors? There is no show without punch as they say and without Telstra you don't have a network, just a cobbled together mismatch of cables, wires and companies. Telstra invented the word network long before the IT companies ever thought of the word. And it's secure and free of viruses. Ask yourself why Optus only provides 4G coverage to approximately 10kms from the Melbourne CBD. Cost. Labour. Incapable of doing it any faster. Competition yes. Bludging off the back of Telstra. No.

Commenter

Stop playing on mummy's computer

Location

Melbourne

Date and time

June 11, 2013, 5:04PM

Bludge off Telstra?

You goose. Go ask Telstra for a Managed Service where they have a monopoly and see what they will try to charge to 'bludge' off them.....

Commenter

Evo

Date and time

June 11, 2013, 5:16PM

Dale:"Lines that Telstra never paid for in the first place"

Completely untrue at every level.

1/ Whn Telecom Australia was formed, the total value of it's assets was added up and converted to a loan from the government which the commission had to repay. This is the first time the assets were sold.

2/ When Telstra became a private company, the total value of all it's infrastructure was included in the share price. This is the second time the assets were sold.

3/ At the time of the sale, there was very little fibre backhaul, most by far has been installed since the sale and paid for by the shareholders by way of reduced dividends diverted to capital works. So, the assets you complain about didn't exist prior to the sale and where paid for wholly and solely by Telstra shareholders such as myself.

Commenter

Goresh

Date and time

June 12, 2013, 8:31AM

John, bludge on Telstra? Clearly you have no idea how much othe ISP's are forced to pay Telstra for the lines. Lines that are not maintained nor improved.

Commenter

James

Date and time

June 12, 2013, 8:59AM

Democracy was supposed to be governmen tof the people for all of the people ,by the people,too.Who got the stranglehold on that "supposition"

Commenter

Kane

Date and time

June 11, 2013, 11:08AM

Abraham Lincoln"Government by the people, of the people, for the people."

A democracy is a society in which the citizens are sovereign and control the government.

Switzerland is the world's only true democracy because no legislation can be enacted by its parliaments without voters having the opportunity to call a referendum to decide whether it becomes law.

Switzerland is a democracy, pure and simple. The people have the final say on legislation since they've not allowed politicians to usurp their power.

Direct democracy is a way to check political power.It allows benevolent and enlightened citizens to oppose laws made by PHONY politicians.

Direct democracy would stimulate government to do the job it was elected to do....

Australia system of democracy is:A GOVERNMENT IN WHICH THE PEOPLE ELECT THEIR DICTATORS .

ARE YOU READY TO SIGN A BLANK CHEQUE TO THE MOB?

In one word we are a true MAFIACRACY.

"Government by the MOB, of the MOB, for the MOB."

Hard to understand?

Commenter

half

Location

Sydney

Date and time

June 12, 2013, 9:04AM

GEEZEzz when will this labor farce END????????? now we will be paying for expensive gold plated broadband that is if you can get it. Does it get any worse than this???

Subscribe to IT Pro

Follow Us

Editor's Choice

Prime Minister Tony Abbott has bolstered Malcolm Turnbull's ministerial duties, handing him greater responsibility for e-government in a push to expand the use of a single digital identity for Australians.

Data

The new roof that spans Margaret Court arena does more than keep out the weather. Built into the gantries that surround the sliding ceiling are Wi-Fi antennas that beam web access to every ticket holder.